Does CCCS Hurt Your Credit?

CCCS is the abbreviation for Consumer Credit Counseling Service, which is also known as National Federation for Credit Counseling. Agencies under the CCCS umbrella counsel people with debt issues and help them manage their debt. In some circumstances, using a service like CCCS can put a dent in your credit record. In others, it can help you change a dangerous credit problem from leaving lots of scars on your credit report.

Credit Counseling

When a consumer goes into a CCCS office purely for counseling, it is unlikely his score will be damaged. Whether by phone, in person or via the Internet, the original counseling session will mostly be an exchange or information. The counselor will find out about the consumer's income, debts and expenses and what underlying issues might have contributed to the client's financial troubles. Using this information, the counselor drafts a plan for the client to follow to tackle his own debt problems. This should not hurt the client's credit score and may help if the client can get debt issues under control before the client starts missing payments.

Debt Management Plans

Under some circumstances, the agency may propose that clients get involved in a debt management plan. This means that the client and agent create a monthly budget for the client, out of which the client pays a monthly allotment to the agent for paying his unsecured debts. When clients enter a debt management plan, the agency pays their unsecured debts each month for a small fee and also frequently negotiates lower fees and interest rates from creditors. With a debt management plan, the consumer pays all debts off in a specified amount of time and must cut up all credit cards.

How it Impacts Your Credit Report

Any time you don't pay your bills as specified, complete with fees and interest rates agreed to at the onset of receiving the credit, creditors will report this and it can impact your credit rating. How it impacts your credit rating varies according to many factors. If it keeps you current on payments, it will probably help. But if you're already behind, it may cause more damage. The Fair Isaac Corp., which created the scoring system, looks at a complex matrix of factors with payment history and amount owned making up more than 60 percent of the score. There's no set number the score will drop for using a counseling agency.

CCCS vs. Others

If you do get help, CCCS is a better choice than many, according to the Federal Trade Commission and MSN Money. Agencies under the NFCC umbrella have certified counselors who work for free or a very small fee. Some agencies will take money up front and pay themselves, letting your bills lapse a month. Some agencies negotiate debt down so far your credit report takes a big hit. NFCC has much higher standards than many organizations that handle debt issues.